The UK Financial Conduct Authority (FCA) has served its first enforcement action for breach of transaction reporting requirements since it came under law through the UK Markets in Financial Instruments Regulation, Mifir.
The case concerns Infinox Capital which has been fined £99,200 by the watchdog for failing to submit 46,053 transaction reports between 1 October 2022 and 31 March 2023.
This oversight “risked market abuse going undetected,” said the regulator, adding that “to monitor, detect and disrupt market abuse effectively, the FCA needs to receive complete, accurate and timely transaction reports.”
To date, the FCA has fined several firms for transaction reporting failures, including some of the biggest names in the industry. This instance, however, signals the beginning of the new era, wherein such breaches will be officially considered under the Mifir laws by the data-led regulator.
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Specifically, Infinox failed to submit transaction reports for single-stock contracts for difference trades executed through one of its corporate brokerage accounts over the five-month period, which reportedly accounted for the majority of this business line.
The breach “highlighted weaknesses in Infinox’s transaction reporting systems and controls for a high-risk investment product,” said the FCA.
Infinox identified its failing following a third-party review, however the firm did not proactively report the breach to the watchdog – instead the regulator identified this discrepancy in transaction data submitted by Infinox itself.
The breach highlighted weaknesses in Infinox’s transaction reporting systems and controls for a high-risk investment product.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “As a data-led regulator it is vital that firms submit accurate and timely transaction reports, and promptly bring any failures to our attention.
Infinox failed to do this, which meant market abuse could have flown under the radar and risked the integrity of the market.”
Smart added that the regulator’s specialist teams are constantly monitoring market data in real time in order to track indications of any misconduct.